Luan Cox
Luan Cox

Crowdnetic debuts marketplace lending gateway

Funding Circle's Sam Hodges
Funding Circle’s Sam Hodges

Marketplace lending technology and data provider Crowdnetic has unveiled a new tool designed to connect loan applicants with multiple leading loan providers in marketplace lending and other sectors.

Marketplace Lending Gateway employs a real-time matching and allocation engine to connect the two sides. It allows platforms to refer an applicant who does not meet their criteria to others who may very well provide the funds.

This is possible because many platforms concentrate on very specific niches, whether it be different real estate sectors, debt consolidation or small business loans. The referring institution generates revenue and, they hope, good will through the referral while the applicant sees an increased chance of obtaining funds.

The marketplace lending industry has signed on to the initial rollout. Heavy hitters Kabbage, Avant, Funding Circle, Lending Club and OnDeck are among the platforms taking part.

Funding Circle’s Sam Hodges sees the Marketplace Lending Gateway as a natural part of his platform’s growth strategy.

“Building strong partnerships is a core part of our growth strategy, and we’re always looking for innovative ways to extend transparent and affordable financing to even more small businesses. Through Gateway, banks and other partners can leverage our strong underwriting and customer-first approach to help clients they might otherwise leave unserved, and for us it’s a great way to build originations and help a new set of businesses access the capital they need to grow.”

The initial partner list also includes First Choice Bank, whose loan service arm is the mortgage service partner for Costco, and LoanLogics, who represents a network of community banks, credit unions and independent mortgage banks across the country.

Given that it costs as much to underwrite a $50,000 loan application  as it does for a $1 million application, as long as plenty of the latter exist, the former will have trouble getting their applications approved at traditional lenders. Why spend 20 times as long to underwrite the same amount when you do not have to?

Banks realize this but also see the growing popularity of marketplace lenders who, empowered by technology, are able to profitably service applicants seeking smaller amounts. They are looking to get involved through partnerships, white label solutions, and, inevitably, acquisitions.

Luan Cox
Luan Cox

Crowdnetic CEO Luan Cox recognizes the inefficiency of thousands of loan seekers having difficulty and sees the Marketplace Lending Gateway meeting a wide need.

“There is a tremendous supply-demand imbalance between borrowers and lenders. Institutional investors are seeking out these loans, which are often at rates below what traditional institutions offer.”

“Therefore, Gateway provides the much-needed connection between those needing capital and those looking to invest, while helping banks provide another service to their clients.”